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The Trump administration is reportedly freezing $125 million in funding to the United Nations (U.N.) agency charged with assisting Palestinian refugees amid frustrations over a lack of progress on a peace deal between the Palestinians and Israelis.

Axios reported Friday that the Trump administration did not transfer the funding to the U.N. Relief and Works Agency (UNRWA) on Jan. 1 as planned, and was conducting a broader review of U.S. assistance to the Palestinian Authority.

A State Department official denied that the department had missed a deadline, telling The Hill that funding decisions were still underway.

“Contrary to reports that we have halted funding to UNRWA, the decision is under review. There are still deliberations taking place, and we have missed no deadline,” the official said.

A State Department official had told Axios that the funds were not necessarily frozen, and that the administration has until Jan. 15 to decide its next steps.

The $125 million in question amounts to about a third of Washington’s annual donations to the agency.

According to Axios, Trump is considering cutting that portion of the funding altogether, and is weighing slashing as much as $180 million in U.S. funding to UNRWA.

U.S. Ambassador to the United Nations Nikki Haley suggested this week that the U.S. could cut funding for the Palestinians unless they agreed to return to the negotiating table with Israel.

The Palestinian Authority suspended contacts with the Trump administration last month after the president announced that the U.S. would recognize Jerusalem as Israel’s capital. Palestinian officials and other leaders in the Arab and Muslim worlds have said that the move essentially disqualified the U.S. from brokering peace talks in the region.

Israelis consider Jerusalem their eternal capital, but Palestinians have also long aspired to establish the city’s eastern sector as the capital of a future Palestinian state, making the city a sensitive subject in potential peace talks.